Crypto Markets Brace for Volatility as Rising Oil Prices Meet Hawkish Fed Signals

Bitcoin remained stable near $64,000 despite multiple headwinds, including the Federal Reserve’s hawkish policy signal, renewed Middle East tensions, and an 8% overnight spike in oil prices that dragged the Dow Jones Industrial Average down 2.2% and pushed the Nasdaq to a three-month low.

The crypto market showed relative strength on Thursday, with bitcoin trading almost unchanged around $63,915 and ether slipping just 0.25% since midnight UTC, even after a challenging session for global risk assets.

The calm in prices, however, masked significant volatility following the Fed’s interest rate decision. Sharp reversals in both directions forced leveraged futures traders to exit positions, triggering a wave of liquidations across crypto markets.

Although the Federal Reserve kept rates unchanged, three officials backed a rate increase, reinforcing expectations that monetary policy may remain restrictive. Higher rates often weigh on risk assets by limiting liquidity and increasing the cost of leverage.

According to CoinGlass, around $286 million in crypto positions were liquidated over a 24-hour period. Long traders accounted for approximately $186 million of the losses, while short traders represented about $100 million, showing a market that moved aggressively in both directions before returning close to previous levels.

Bitcoin liquidations were evenly distributed between buyers and sellers. Roughly $57 million in BTC positions were wiped out, with around $28 million coming from long positions and $29 million from shorts. Bitcoin traded between $63,247 and $64,660 during the period, a relatively narrow range that was still enough to trigger forced liquidations.

The largest single liquidation involved a $2.9 million bitcoin position on Binance.

Ether experienced the highest liquidation total among major cryptocurrencies, with around $58 million in positions cleared, mostly from long traders. Ether traded between $1,850 and $1,920 during the session. Bitcoin was trading near $63,900 at the latest update, little changed from the previous day, while ether remained around $1,900.

The majority of liquidation activity took place around Wednesday’s Federal Reserve announcement, when the widely anticipated decision caused sudden market swings. The event triggered roughly $188 million in liquidations, including about $130 million in long positions.

A significant portion of losses came from equity-based perpetual futures available on crypto exchanges. Traders lost about $19 million in SanDisk positions, $10 million in Micron contracts, $7 million in SK Hynix futures, and $7 million in SOXL, a leveraged semiconductor ETF.

These products allow traders to speculate on traditional stocks and funds through crypto platforms while using leverage similar to bitcoin futures.

Most of the equity perpetual liquidations involved bullish positions. Micron saw about $9 million in long liquidations compared with $1 million in shorts, while SanDisk’s long liquidations were roughly twice the size of short liquidations.

Many traders had used crypto derivatives platforms to bet on continued gains in the AI semiconductor sector, entering the downturn with heavy long exposure.

That strategy quickly turned against them as chip stocks suffered their steepest selloff of the year. SK Hynix shares plunged 17% on Wednesday despite reporting a 557% increase in profits, as investors focused on results falling short of elevated expectations. South Korea’s Kospi has now declined more than 40% from its June peak.

The latest event marked the second major disruption involving equity perpetual futures on crypto platforms this week. Earlier on Monday, a single trade on a thin Korean pre-market market pushed Trade.xyz’s SK Hynix perpetual contract down 19%, triggering around $60 million in liquidations. The exchange later agreed to reimburse affected traders.